Why Us?
A Safer, smarter way to rent!
no 'one size fits all'
Each master lease is tailored to the needs of the individual owner. There is no ‘company fee structure’.
We provide a safety net from vicarious liability
Master leasing avoids the vicarious liability associated with agency and sub-agency, which exists when hiring a fee manager. (Vicarious liability is a principal’s liability for the acts of his agent when the agent is acting within the scope of the agent’s employment agreement.) Example: If a Fair Housing complaint is brought against the master tenant, it should not subject the property owner to liability.
Active Participation
Owners can show that they actively participated in the rental of their real estate since they do not pay any management fees to others. This allows them to claim up to $25,000 of passive losses, if applicable, against other sources of income on their tax return (subject to IRS adjusted gross income phase-out rules from $100K to $150K). Property owners must seek their own tax and legal counsel. Master tenant will not render tax and/or legal advice.
Lower tax audit profile
A master lease can create a lower tax audit profile for owners since less gross income and less operating expenses will be shown on their tax returns. Rents received will be net of master tenant’s profit, and owners’ operating expenses will not have management fees as an expense.
Can limit downside risk
Owners who are risk averse can often shift some of their financial responsibility in dealing with the property to the master tenant and thereby better predict their properties future cash flows, either positive or negative.
Entrepreneurs vs. employees
Master tenants are risk takers who think outside the box and may be more capable in solving problems. They also have more motivation as lessees than an employee of a management company whose day job ends at 5:00 pm. Master tenants earn no profit and can incur liability unless the property is successfuly subleased at a profit.
Occupant screening
Owners often feel that master tenants are better motivated to properly screen sub-tenant occupants since master tenants are liable to perform based upon the terms of their lease with the owner and do not earn leasing fees to replace tenants that they need to evict.
Fair Debt Collection Practices Act
Owners may be able to save 30 days or more if a tenant eviction is needed. Property Managers may be subject to the federal Fair Debt Collection Practices Act; principals are not. (Jaime Heiberger, an attorney serving a 3-day notice to pay or quit on behalf of a Landlord, was found subject to the FDCPA by the 2nd Circuit U.S. Court of Appeals because she was deemed a debt collector.)
Owners can expect more consistent monthly income
Master tenants cannot unbundle their services and charge owners additional fees based upon the monthly tasks covered by a fee schedule listed in a management agreement, as do some fee managers. Master tenants are principals to a lease that specifies the rent that is due and payable each month. Owners appreciate knowing exactly what they will receive as a fixed payment each month or as a percentage of the occupant’s rent.
Dodd Frank, the safe act and installment sales
Installment sale tax treatment is still legal, but in many instances, owner carry back financing is not. A master lease could allow a landlord to retire and receive a fixed income from his or her properties without violating any of the country’s current lending laws. The landlord’s portfolio could be leased long term (25 years for example) to an entrepreneur who would agree to pay for all property expenses per the terms of his or her triple net lease. This structure would create many benefits for both landlord and master tenant. The landlord would continue depreciating the property and not pay tax on a sale. His heirs would receive a step-up basis when the landlord dies (under current laws). The master tenant would be able to amortize any improvements made over the remaining lease term and would be able to expense all other costs incurred.